Social Enterprises


Social enterprises are organizations that engage in trade geared towards solving of social problems and improve a community’s livelihood (Pearce & Kay, 2003, pp 12). The organizations may either exist as for profit or not for profit entities that sell products in the open market. Most of the money raised from sale of the products is however reinvested into the business or the community therefore benefiting the society even more. Ideally, social enterprises bridge the gap between commercial entities and charitable organizations by providing services that the two fail to avail (Martin & Thompson, 2010, pp 42). They are referred to as social enterprises due to their ability to channel the power of business into attempts to bring about environmental as well as social change. Ideally, social enterprises may exist in many diverse ways and their organization depends on the country of operation.

Most organizations could argue out that they have social motives behind their operations but it is the commitment to these motives that determine whether they really are. In the wake of several developments in the world, social enterprise are continually changing in both scope and magnitude and cover a wide array of social problems to day. Predictions based on past changes point out to the fact that these enterprises will continue to change in the foreseeable future (Doherty, 2009, pp 39). While change is involuntarily welcome, it must be positive to help in the alleviation of societal problems in the organizations’ spheres of operation. Ultimately, the world should brace itself for increased activity from the social enterprises as more people are gaining social awareness on issues that affect the world. This report reviews the literature on the conceptions of social enterprises over time while tracking down the continued metamorphosis of the organizations. In addition, the challenges faced by the enterprises and the probable changes to occur in the future are analyzed. Ultimately, the report uses the analysis to make innovative recommendations on future developments in the social enterprise sphere.


Literature Review

The concept of social enterprises

The concept of social enterprise dates back to the last century but literature on the same began to surface around the 1990s. It is at this time that the concept gained prominence and attracted interest from social science researchers. Essentially, literature on social enterprises is relatively new compared to other aspects of entrepreneurship whose literature dates back to the 1700s. All social enterprises exist for the purpose of social improvement and uses trade to achieve this mission (Martin & Thompson, pp 27). The emergence of social enterprises can be attributed to the development of charitable organizations that aimed at sustainability in their operations. However, this is not to say that there are no social enterprises that arise out of start ups. Since the emergence of the concept, social enterprise enthusiasts have continually encouraged new businesses to align their purposes to the ideals of social entrepreneurship (Ridley-Duff & Bull, 2011, pp 23).

The concept of social enterprise is not entirely new but a renewed business concept under the mission of using business as a tool for advancement of social development. The concept provides a balance between the financial goals of doing business and the social objectives of any entity (Bornstein, 2007, pp 21). In fact, every other person has an obligation of making the society a better place. It is on the basis of this realization that the concept of social enterprises emerges. Essentially, social entrepreneurship is a perfect solution to the problems that have continually crippled the sustenance not for profit organizations. Needless to say, the mere involvement in purposeful societal change is not in itself entrepreneurship. Organizations can only become enterprises upon engagement in business generating activities and with an aim of making profit.

Social enterprises are different from mainstream not for profit organizations because of their involvement in business to avert social problems (Price, 2009, pp 52). In the recent past, social enterprises have developed to reflect aspects such as focus on clients and revenue generation. The incorporation of the new developments gives the social enterprises legitimacy in terms of both financial and social aspects of the organization. In addition, social enterprises are continually focusing on efficiency and effectiveness in their operations (Doherty, 2009, pp 18). Over the recent past, most social enterprises have inclined towards innovation, something that was not common in the traditional not for profit organisations.


Social enterprises in addressing social needs

Founders and initiators of social enterprises can be termed as agents of change for their role in improving the social and environmental issues in the communities. The concept of social entrepreneurship has been defined from the heroic viewpoint for its role in saving the society from different problems that affect them (Gidron & Hasenfeld, 2012, pp 24). One of the biggest roles that social enterprises play in any society is the identification of both problems and identification. In addition, the organizations incubate innovation and risk in trying to find solutions to the societal problems. The success of the roles of social enterprises is only confirmed through the achievement of the desired outcomes and especially through innovative ideas (Lynch & Walls, 2009, pp 25).  In being innovative, social enterprises have the ability to change the manner in which social problems are solved. Ultimately, their role is bound to the creation of positive social change through the solution of the identified problems.

The role of social enterprises is not limited to the incidence of solving societal problems but stretches far and wide to cover the indirect benefits of the whole society. Other advantages include the creation of employment opportunities for members of the affected society and the competitive advantage occasioned by their operation (MacMillan & Thompson, 2013, pp 36). In addition, the organizations contribute towards the achievement of a national identity and the increase in economic growth within the country of operation. Moreover, individuals in the society have the advantage of personal growth as well as increased reputation and recognition from their involvement. Ultimately, it is not just the society that stands to benefit from social enterprises but the individuals as well (Sekn, 2006, pp 46).

Usually, the roles of social enterprises are misunderstood to include only the social change that is imparted on the society. However, the impact of social enterprises on individual members of the society is often overlooked (Dees et al, 2002, pp 17). Social enterprises are viewed as efficient models through which social needs are addressed. Through this, social enterprises are alternative organizations that can perform the role of charitable, not for profit and commercial or private organizations. It is highly likely that social enterprises will continue to employ innovative ideas to create new solutions that are geared towards the alleviation of social problems.

The role of social enterprises in the alleviation of poverty is most notable in the various nongovernmental organisations involved in micro enterprise development. NGOs may be involved in a wide array of different activities but the development of micro enterprises represents a form of trading. In so doing, the social enterprises can effect change through training and mentoring of founders of business start ups thus affecting the entire society positively (Kerlin, 2009, pp 37). Moreover, social enterprises have been involved in the extension of credit to the owners of small businesses which in turn creates employment opportunities to the members of the community.




Changing Role of Social enterprises today

In the wake of harsh economic conditions that face the world, governments across the world are finding it extremely hard to cater for all the social needs. In the developing countries, the situations are worse with most of the citizens living below the poverty levels and facing the danger of starvation. In the foregoing, the social enterprises have the opportunity of stepping up to bridge the gap by creating social values in the communities (Doherty, pp 2009, pp 32). In addition, continued government borrowing in the developing countries means that most countries cannot afford all the social amenities for all the citizens. The exploitation from corporate businesses does not make the matters any better as poor people are charged high rates for services they so much need. The scenario in the world does not even promise to get better in the wake of such environmental challenges as climate change and global warming. This calls for the entry of social enterprises to help in averting the dangers posed by the said social problems.

The social enterprises are continually viewed as the service providers of basic necessities that were traditionally a reserve of the government. Today, most people, and especially those in remote areas, depend on social enterprises for the provision of medical healthcare and other basic services. Essentially, this means that the enterprises must innovate ways of providing such services while still maintaining their sustainability. The government has evolved from being a service provider to become a platform provider. Its role has been limited to the provision of a favorable environment for doing business to the different players in the market. This leaves a huge gap that can partly be filled by social enterprises among other business and charitable organizations (Martin & Thompson, 2010, pp 30).

In addition, the government no longer provides free services to the people. All over the world, most governments put in measures and policies that provide conducive environments for the provision of these services. Even when the services are to be provided by the government, they only provide them at subsidized rates therefore creating a gap that needs to be filled in terms of service provision. The role of the social enterprises has thus stretched from simple charity to being change makers in the different communities that they work in. Essentially, the social enterprises are now tasked with the role of availing the services at reasonable prices that can be afforded by the people who need the services. They therefore act to cushion the citizens from exploitation by the corporate business organizations. Most governments across the world have realized the important role that social enterprises play in meeting the basic needs of the citizens.


Challenges faced by social enterprises

In the course of making change in the society, social enterprises are faced by a myriad of problems. One of the main challenges that they face is the lack of political will from the local administration and in some cases the national governments. For instance, the social enterprises could be labeled as white imperialists that are out to exploit the people in the developing world. It is not surprising to find local leaders in African countries leading their people against social enterprise headquartered in Europe under the disguise that they are exploitative. In addition to such exploitation, social enterprise may face legal hurdles in the process of registration and renewal of licenses. In the developing world where corruption levels are abnormally high, social enterprise may find operations to be a nightmare as every leader solicits bribes from them (Pearce & Kay, 2003, pp 18).

Another challenge that faces the social enterprise is the guarantee of their sustainability. Traditionally, charitable organizations survived on funds from donors. However, today, the absence of funds is one of the challenges that face social enterprise as most donors pull out their funds due to the economic turbulence that faces the world. Currently, most of the social enterprises are not able to raise revenue through the sale of products. In fact most of the organizations sit in the middle of nowhere waiting for external funding from philanthropists. Moreover, most of the donors do not trust social enterprises as being run as for profit organisations (Bornstein, 2007, pp 9). This therefore compound the problem further as social enterprises are tied on their hands leaving them with no option but to wait for funding from donors.

Another challenge facing social enterprises is that they cannot communicate their value objectively. Most people think of social enterprises as only having value to the communities they operate in. However, most of the social enterprises deliver more than commercial value and impact on the society and the individuals in many different ways. The fact that social value cannot be quantified further compounds this challenge as social enterprises find it diffi9cult to communicate to investors and donors.



It is no doubt that social enterprise continue to impact on the society positively. In addition, it is true that they have continued to evolve over time depending on the societal dictates within their spheres of operation. However, the circumstances within which the enterprises function are equally difficult and their sustenance is not guaranteed. Ideally, social enterprises must do more than they are currently doing to guarantee their sustenance in the foreseeable future. One way of ensuring success is through embracing innovation in their operations (Lynch & Walls, 2009, pp 48).

Social enterprise can partner with local businesses to provide the necessary societal needs. Through these partnerships, the social enterprises can attract funding from the involved organizations and even other interested individuals. For instance, they could package the donations as a way of fulfilling the companies’ corporate social responsibilities. In so doing, the social enterprises will not only increase their sphere of operation but also stand a bigger chance of attracting funding. In addition, social enterprise can improve the relationship with the local communities by hiring workers from the communities. They can also offer volunteering opportunities to the young people in the communities therefore guaranteeing them of better access to the communities. In so doing, these social enterprises stand a better chance of gaining local political will.

In the future, social enterprises have to become more innovative in a bid to raise revenue to fund their operations. The idea of sourcing funding from external donors is continually becoming outdated and the managers of these enterprises need to devise creative ways of funding their operations. One way of achieving this is through the sake of society acceptable products at subsidized prices. However, in so doing, the social enterprise must ensure that they are not driving out local businesses in their areas of operations. They can be invo9lved in income generating activities while still helping the people to gain the services they need. Importantly, the community must not feel like they are being stolen from by the social enterprises.




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KERLIN, J. A. (2009). Social enterprise a global comparison. Medford, Mass, Tufts University Press.

LYNCH, K., & WALLS, J. (2009). Mission, Inc. the practitioner’s guide to social enterprise. San Francisco, Berrett-Koehler Publishers.

MACMILLAN, I. C., & THOMPSON, J. D. (2013). The social entrepreneur’s playbook: pressure test, plan, launch and scale your social enterprise.

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Pearce, J., & Kay, A. (2003). Social enterprise in anytown. London: Calouste Gulbenkian Foundation.

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Ridley-Duff, R., & Bull, M. (2011). Understanding social enterprise: theory & practice. London: SAGE.

SEKN. (2006). Effective management of social enterprises: lessons from businesses and civil society organizations in Iberoamerica. Cambridge, Mass, Harvard University.

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